Hungry for Eagles

By Dave Harper and Connor Falk

Silver American Eagle one-ounce bullion coins were put back on sale July 27 by the U.S. Mint.

The Mint had run out of the coins in early July. It took almost three weeks to build up a supply of 3 million coins that could be sold to the Mint’s Authorized Purchaser network.

Though there was no one-day sellout, buyers grabbed nearly 90 percent of the available supply in three days despite Mint allocating supplies.

On July 27 1,323,500 coins were sold. The next day, buyers took a further 1,221,500 pieces and on July 29 77,500 more went out the door. As of July 29, the Mint had 377,500 of the 3 million coins left.

Total sales for the month stood at 5,331,500 pieces for the month of July with two days to go.

Should all 3 million coins be taken before August begins, the monthly sales total could reach 5,709,000. That figure would make July the top silver Eagle sales month in 2015.

The January sales total was 5,530,000 silver Eagle coins. Demand in that month is supercharged by the strong universal desire to get the new date. There is no such aspect to July demand.

For example, silver Eagle sales recorded by the Mint in July 2014 was the lowest of the entire year at 1,975,000 pieces.

Obviously, this year’s sales have traced a new path.

In 2014, Jurkowski said the figure was 25,768,500. In 2015 it stands at 27,117,500.

Last year was a record sales year with 44,006,000 being vended. Perhaps a new record will be achieved in 2015.

The biggest sales month in 2014 occurred in October, when 5,790,000 coins were sold.

Because of silver’s declining price, currently trading at $14.62 an ounce, the $2 per coin the Mint charges for Eagles is becoming a bigger and bigger piece of the overall sales price per coin. This works out to a markup of 13.7 percent. Then the Authorized purchasers and sellers further down the distribution chain add their markups.

On the APMEX retail site, buyers can get the 2015 coins for as little as $3.59 over bullion value, or a 24.6 percent markup.

This is a quantity figure. If you only want, say 10 silver Eagle coins, your markup is $4.59 and that is 31.4 percent.

Clearly, at this level of markup, buyers of silver Eagles are also looking for alternatives to take advantage of the current low price of silver.

Ron Drzewucki, CEO of Modern Coin Wholesale, said the most recent drop in the price of silver has led to a large demand for the metal.

“Our silver sales are up 10 times what they were two and a half weeks ago,” he said of the Lakewood Ranch, Fla. based business. “This is really a price point where investors want to buy.”

However, customers aren’t interested in silver Eagles, he said.

“The premiums are just too high on silver eagles,” Drzewucki said. “Our most popular silver item is the one-ounce buffalo round, which we sell at just 89 cents over spot for payment in a bank wire transfer. We’ve also seen interest in the 5- and 10-ounce buffalo silver bars.”

For other dealers, silver Eagles have lost their popularity simply because there aren’t any available.

Julian Jarvis, owner of Julian Jarvis Rare Coins, Greencastle, Ind., said he’s been out of stock on silver Eagles for weeks.

“I haven’t been able to get any into the store,” he said. “The distributor I order from said that they were unavailable for three to four weeks when they first sold out. I just got two boxes on July 28.”

He said premiums for silver Eagles from some dealers have reached as high as $4 to $5 in his area.

“I’m able to get them for $2.50 over the silver price and sell them for $3.50 over,” he said. “But $19 for a silver Eagle is a lot.”

Instead, buyers have turned to pre-1964 90 percent silver U.S. coins, he said.

“Old silver coins have been hard to get since silver Eagles sold out,” he said. “I’ve seen premiums between $2 and $4 over spot price for coin silver.”

How long the high demand for silver coins could continue, he couldn’t say.

“This could be the bottom, but it may go even a little bit lower,” Jarvis said of silver’s spot market price. “I don’t see the market getting better overnight.”

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